Progressive Economists Take a Stand

The Obama administration and the new Congress will soon be debating plans to revive the U.S. economy. To contribute to this debate, a group of progressive economists sponsored by PERI and the New School’s Schwartz Center for Economic Policy Analysis have issued a statement of Principles for Economic Recovery and Financial Reconstruction from Progressive Economists, accompanied by a detailed Progressive Program for Economic Recovery and Financial Reconstruction.

These documents argue that a successful economic program must reject the extreme free market and neoliberal policies that contributed to the current economic debacle. They support the Obama administration’s call for a massive economic recovery program, but argue that to succeed, this program must focus on raising the incomes and security of the vast majority of Americans who have been sidelined from power in recent decades.

They also reject calls to simply ‘hit the re-start button’ which would put the economy back on the destructive path that led to this economic disaster. These economists call for an orderly downsizing and restructuring of the bloated financial system so that it serves the needs of the real economy, rather than fueling speculation and fraud. This means that the recovery program must go beyond an economic stimulus package and must fundamentally restructure a number of basic financial and economic institutions.

The Progressive Program develops an interlocking set of initiatives that include:

1) a massive fiscal expansion program centered on aiding state and local governments, keeping people in their homes, creating green jobs and public infrastructure, protecting key industries and instituting government employer of last resort programs;

2) economic policies to end extreme inequality and restore a balance of economic and political power to labor, households and communities;

3) programs to reconstruct, regulate and manage financial institutions so they will serve people’s needs and contribute to financial stability;

4) international macroeconomic and financial coordination to make the transition to a fairer and more balanced global growth regime; and

5) a set of comprehensive and open Congressional hearings on restructuring the financial system, along with the rules, institutions and public oversight mechanisms through which it functions.